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In re Stout

Decided: January 31, 1978.

IN THE MATTER OF RICHARD R. STOUT, AN ATTORNEY AT LAW


For suspension for one year -- Chief Justice Hughes and Justices Sullivan, Pashman, Clifford, Schreiber and Handler. Opposed -- None.

Per Curiam

This disciplinary proceeding against respondent, a member of the bar of New Jersey since 1940, involves the admitted misuse of trust funds and failure to maintain a ledger book or similar record for trustee accounts as required by R. 1:21-6(b)(2).

Sometime prior to 1973, respondent was retained by a client in connection with a claim which she was asserting against the estate of her former employer. The matter was settled in April 1973 for $50,000 and a counsel fee of $10,000 was agreed on, payable out of the settlement money. When the check for $50,000 was received in May 1973 by respondent, he mailed it to his client in Florida with instructions to endorse it and return it to him. The covering letter stated that upon receipt of the check back, "we will forward our check to you in the amount of $40,000."

The client complied with the instructions. When respondent received the endorsed check, he immediately deposited it in his trust account but did not forward the $40,000 to his client claiming a tax problem with the Internal Revenue Service had to be worked out first.

It is unnecessary to detail the client's numerous and unsuccessful efforts to secure payment of the $40,000. Respondent kept promising her that the matter was about to be resolved and that she would receive the money shortly. On October 29, 1975, after the client, in addition to protesting about respondent's failure to remit the money, complained of financial difficulties, respondent sent a check in

the sum of $5,796 for interest earned on the settlement and assured the client that "the balance will be sent you next week."

Finally the client consulted an attorney in Florida. In April 1976 the attorney wrote respondent and demanded payment of the $40,000 with interest, and threatened a grievance complaint if the money was not received forthwith. Respondent answered on May 5, 1976 by promising to send the balance "within the next ten days."

When the money was not received, the client, by letter dated July 12, 1976, wrote to the Monmouth County Ethics Committee (Committee) complaining about respondent's failure for more than three years to remit the $40,000 to her. Apparently the Committee tried to adjust the complaint. On August 4, 1976 respondent delivered to the secretary of the Committee a covering letter and check dated May 20, 1976 payable to the client in the sum of $43,070.66 representing the proceeds of the 1973 settlement together with interest thereon, less the $5,796 interest paid in October 1975. The check and letter were forwarded to the client, but when the check was presented for payment, it was returned for insufficient funds.

A formal complaint charging respondent with the wrongful withholding of the settlement money was signed by the client and filed with the Committee in August, 1976. Subsequently, on September 10, 1976, respondent paid the client the $40,000 in full, together with interest, expenses and a counsel fee. By letter dated March 4, 1977 the client wrote to the Committee saying that she wished to withdraw her complaint against respondent as he had fully paid her all sums due. However, a complaint charging ethical violations may not be withdrawn and the investigation and disposition thereof terminated merely by the request of the original complainant. See In re Rosenblatt, 60 N.J. 505, 508, n. 2 (1972).

When Central Ethics received a copy of the complaint against respondent, it called for an audit of his trust

account. Upon receiving the audit dated October 1, 1976, Robert Cowen, Chief, Central Ethics, filed a second complaint with the Committee charging respondent with having misused and misappropriated trust funds and with failing to maintain a ...


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